Find me, if you can: How we helped open a new startup
Last fall, clients approached us with a non-standard task. There were two partners who were excited to start their own business. The entrepreneurs intended to work in the machine tool industry. They had a business plan, but they did not have legal framework for the partnership. In other words, they verbally agreed on who should finance the joint venture and how much, who is responsible for attracting personnel, who is in charge of contractor relations, and how profits are distributed, but none of these agreements were documented. As a result, in the event of a violation of the conditions, only their words as gentlemen, rather than the state court, could compel the agreement to be fulfilled. Recognizing that the risks in such a situation are extremely high, the partners approached us for assistance.
The ideal solution to the clients' problem was to form an OOO, document all the agreements in the charter, and, if something didn't fit, sign a corporate agreement. However, during the consultation process, one critical detail became clear. One of the partners now holds a senior management position at a well-known design firm. This company's internal policy prohibited him from running his own business at the same time. The contract with that company expired only after three years. As a result, registering an OOO for this partner would automatically violate the contract with his current employer.
Following such an introduction, we began to investigate this partner's role in the business and the specific interests he sought to protect. This partner was the primary investor, which meant that he was responsible for all cash flow (let’s call him the “hidden partner”). As a result, his primary interest was that the funds he invested were directed specifically to the company's work, resulting in increased profits. The second partner (referred to as the “open partner”) was responsible for all operational activities, counterparty selection, and contract signing. Of course, such conditions made our work more difficult, but we were able to find a solution.
Initially, we wanted to record all the parties' agreements in the charter. But now this option has proven to be unworkable. Because the charter defines the relationship between the founders of OOO, and this information is reflected in the Unified State Register of Legal Entities. In our case, we needed to hide one of the partners. As a result, the solution was to create a corporate agreement. The Civil Code allows such an agreement to be signed not only between the company's direct participants, but also by third parties with an interest. The problem arose: how do we justify interest? We didn't think for long because the end result of this story was supposed to be the addition of a “hidden partner” to the list of participants, so we chose the option agreement to help. The option works as follows: when the “hidden partner” wants or has the opportunity, he will transfer his share of the company to himself through unilateral expression of will. Because the share in the company must not be empty and must be backed by good net assets and the ability to generate dividends, the interest of "hidden partner" in entering into a corporate agreement is as follows: the “open partner” must manage the business so that the company develops and strives to grow. To accomplish this, we specified different reporting formats in the corporate agreement, the procedure for approving transactions, rules for informing the “hidden partner” about the business's activities, and ways to influence the company if he notices that some business processes are being broken.
In addition to the primary structure of the corporate transaction, we encountered a number of secondary issues. For instance, every partner was married. When an OOO is formed during marriage in the name of one of the spouses, their share of the authorized capital is considered joint property. Thus, the "hidden partner" faced risks. For example, if relationships of “open partner” with his spouse deteriorate and the couple divorces, the spouse has the right to become a 50% co-owner of the company. If such a negative scenario occurs, the “hidden partner” will not receive the entire share he desired, but rather 50% less.
We discussed this risk with our clients, and they agreed that it was worth eliminating. At the same time, we were drafting a marriage contract between the “open partner” and his wife, which stated that the share of “open partner” in the new startup became his personal property, and the spouse had no claim to it.
Inheritance was one of the secondary issues. Because all people are mortal, until the "hidden partner" transferred the share to himself, there was a risk that if the “open partner” died, the business would completely pass to his heirs, and the “hidden partner” would not return his investments and company share. The ideal solution to the problem would be to make a will in favor of the "hidden partner" for a share of the business. However, brutal jurisprudence and personal beliefs about life and death frequently contradict one another. As a result, the partners agreed to accept this risk and did not require each other to sign wills.
As a result, the company has been established and is currently closing its first transactions. The option and corporate agreements have been signed. Therefore, we can say with confidence that the project was implemented and completed successfully.